Plus500 share price: management blasted by shareholders at AGM

on May 28, 2015

Plus500 Ltd’s (LON:PLUS) management endured a tough grilling by shareholders at yesterday’s annual general meeting (AGM). The company has been at the heart of recent controversy, which saw its UK accounts frozen upon orders given by the Financial Conduct Authority (FCA). This led to a collapse in the company’s share price, which has since recovered somewhat. During the meeting it was admitted that all UK customer accounts had been affected, whereas previously it was claimed by the company that only 45 percent were suspended.

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Plus500’s share price was well in the green today, having added 11.32 percent to 302.50p as of 13:05 BST. The company’s stock had slumped as much as 75 percent to 198.00p since May 18.
Gal Haber, founder and chief executive of the Israel-based CFDs trading platform, said at yesterday’s AGM that “we have to remediate everybody, even those who’ve gone through electronic verification.” The company had initially thought that accounts which had passed an electronic verification process were exempt from the suspension.
The company also said that “lack of controls over the approval of documents” was the biggest issue raised by the FCA-mandated review, which caused the company’s UK accounts to be suspended.
Meanwhile, shareholders blasted management on the mishandling of the whole ordeal. Investors were angry that the company had not told them that there was an ongoing FCA-mandated review happening in the first place. However it was the lack of communication regarding the freezing of accounts which drew the heaviest criticism.
“The price was already £2 off before you made any announcement whatsoever. That’s terrible for shareholders,” an unidentified private investor said as quoted by Business Insider. “The worry for me was the way this came out. This information was forced out in a way.”
Chairman Alastair Gordon said management was confident that the review will find the company’s controls ‘adequate’, and that he would have informed customers and shareholders beforehand had he the chance to do so all over again.
“If I had a time machine I would do that. I didn’t know what was going to come out of the review,” Gordon said. “We were actually quite confident.”
Sources close to the company said that several people at the company’s UK based operations, which yields more than half of the firm’s revenue, had been replaced, Business Insider reported.
In a trading update ahead of the AGM, Plus500 said that the accounts freeze in the UK would cost the company about $4 million in revenue, while the expense of ongoing ‘remediation’ actions are forecast to reach at least $2 million.
The remediation work was reported to be “up to full speed” and was expected to take another month.
Meanwhile, JPMorgan again trimmed its stake in Plus500, this time by about 1.22 percent to 4.57 percent. The bank sold 0.4 percent last week.
On the other hand, Odey Asset Management, a London-based hedge fund run by veteran investor Crispin Odey, has bought up a big chunk of Plus500 stock following the slump. Odey has significantly increased its position in the business three times since the share price crash 10 days ago, becoming the top shareholder with a 19 percent stock, up from about 13 percent.


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